Are You Buying Penny Stocks Of Big Companies?
With today’s economic turmoil, some of the big companies are starting to look like penny stocks. In the last few months we are seeing some of the big boys losing so much value that their price per share has dropped below $5. What does that mean for you in regards to buying penny stocks, trading and making some big gains?
In the auto industry we now see General Motors (NYSE:GM) and Ford (NYSE:F) trading in the $3 range. GM hasn’t seen these levels since 1943. In January 1999 they were trading at $87 per share and in the beginning of this year (2008) they were at $19. Now eleven months later they are on the verge of bankruptcy and trading at just $3 per share.
Ford is in the simular situation, they were at their all time high of $37 per share in March 1998 and are now trading at less than $2 per share.
Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) the two government sponsored mortgage brokers have also lost 98% of their valus since the beginning of this year.
American International Group (NYSE:AIG) were just saved by the government after losing 97% of their value.
For all intent and purpose, these stocks can now be classified as penny stocks. Many traders, especially the newbies and amateurs trade penny stocks for a couple of reasons. One, the price per share is cheap and two, penny stocks typically have the tendency to jump big when refer to as percentage gainers.
Do you really want to start trading these companies that I’ve listed? The answer should be no, but I’m sure quite a few of you guys and gals out there are already do so. I will tell you that these companies as well as their stocks are broken. They are all leading companies that help build this country, but because of bad business practices are now in big trouble of going away for good.
So if you want to trade these penny stocks, go right ahead, but don’t say I didn’t warn you.
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2 Responses to “Are You Buying Penny Stocks Of Big Companies?”
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Fully agree retail investors may be shifting focus to small cap stocks looking for quicker gains. Two companies were sent this week as text alerts and both did very well even in a roller coaster market.